from the tickets-he-re...-we've-got-tickets-he-re.. dept

Over the years, we've written about the Section 230 safe harbors -- which protect service providers from being liable for certain actions of their users -- a number of times. This is perfectly common sense legislation: the blame should be placed on the person who actually committed the action, rather than the tools they used. Yet, for some reason, some still have trouble understanding this. A frequent target of those misunderstandings has been online ticket reseller Stubhub. A few years back we wrote about a ruling in a case in Illinois where the court effectively ignored Section 230. Apparently there was a similar move by a state court in North Carolina some time ago, but thankfully, the appeals court has reversed it, and once again made clear that you don't blame Stubhub for illegal actions performed by its users.

from the urls-we-dig-up dept

We've talked about lifelogging a bit before, where people record nearly every moment of their lives (and make it public somehow). Ignoring Facebook statuses from people's running shoes is just the beginning. Here are a few more examples.

from the something-isn't-adding-up dept

Unlike some, I'm not that up in arms over high CEO pay... if they deserve it. In an open market, if an executive can command top dollar, based on strong performance, I'm all for it. However, if the pay is so totally divorced from performance as to be completely laughable, you have to wonder what's up. Case in point: former NY Times CEO Janet Robinson received an "exit package" of $23.7 million. It was broken down thusly:

Robinson gets pension and supplemental retirement income valued at $11.4 million, performance awards of $5.39 million, restricted stock units worth $1.07 million and stock options worth $694,164, according to the company’s proxy statement filed with the Securities and Exchange Commission today. She will also earn $4.5 million in consulting fees for this year.

Now perhaps you can argue that this is well deserved and negotiated. But here's a key data point found in the same article:

The payout to Robinson is equal to about 2.4 percent of the company’s market value of $981.9 million, and exceeds the approximately $3 million the company earned in net income over the past four years. Not included in Robinson’s exit package is her salary of $1 million for 2011, when Times Co. reported a loss $39.7 million.

Okay. One argument you can make is that at least the NYTimes made some money over the last four years. But can we ask what kind of "performance awards" would make sense when the award massively exceeds the actual profit of the company? Similarly, what kind of "consulting fees" would make sense when those consulting fees also exceed the profit of the company over the last four years combined?

Scott Turow's statement is presumably issued on behalf of the Author's Guild, although there's no indication that any author other than Scott Turow was consulted. (You may remember the Author's Guild as the cheery people whose fear of technology led them to a successful claim that e-books utilizing text-to-speech violated a never-heard-of-before "audio right", in essence stating that reading purchased e-books aloud is illegal.)

Turow's burns through a whole lot of words to arrive at three basic conclusions:

1. Apple is good.
2. Amazon is evil.
3. The future of books is brick-and-mortar.

Let's take a look:

Yesterday's report that the Justice Department may be near filing an antitrust lawsuit against five large trade book publishers and Apple is grim news for everyone who cherishes a rich literary culture.

Obviously, the emphasis is on "rich." Rarely do resellers and publishers collude to lower prices. There are many out there who believe a rich culture can be synonymous with low-priced books, music, and other media, but obviously our opinions don't matter because we haven't written and sold enough books. (No, seriously. Read the comment thread on Turow's post.) Thankfully Barry Eisler and Joe Konrath, who have worked in the business and sold plenty of books, also completely dismantle Turow's arguments, especially his abuse of the word "culture."

Shouldn't those who cherish a rich literary culture prefer books at reasonable prices which allow that rich literary culture to be read by more people? All I can get from Turow's statement is: "the public must prefer their books to be more expensive." In what world is it "grim news" that our "rich literary culture" should be getting cheaper?

We have no way of knowing whether publishers colluded in adopting the agency model for e-book pricing. We do know that collusion wasn't necessary: given the chance, any rational publisher would have leapt at Apple's offer and clung to it like a life raft. Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open.

You might have no way of "knowing," but the conclusions drawn by the DOJ don't look too pretty. Secondly, if "collusion wasn't necessary," then why do we have the appearance of collusion? Did the publishers not have anything better to do with their downtime than push prices around, mainly in an upward direction? Point the third: I thought it was Amazon who used deep discounts on physical books to kill off physical bookstores like Borders, and Barnes and Noble, who in turn killed off independent bookstores, or so the narrative goes. Now all of a sudden it's re-killing off physical bookstores with digital goods?

Just before Amazon introduced the Kindle, it convinced major publishers to break old practices and release books in digital form at the same time they released them as hardcovers.

Because windowing is stupid. Especially in a digital world.

Then Amazon dropped its bombshell: as it announced the launch of the Kindle, publishers learned that Amazon would be selling countless frontlist e-books at a loss... Amazon's predatory pricing would shield it from e-book competitors that lacked Amazon's deep pockets.

Selling something as a loss-leader isn't new, it isn't "predatory", and it certainly isn't exclusive to Amazon. Retailers have been doing this for a long as retail has existed. It's no different than the local grocery store selling ultra-cheap cases of soda during the summer, in the hopes that you'll stock up on hamburgers, hot dogs, buns, chips, beer, etc. while you're there. Amazon selling e-books at a loss was a way to entice customers to purchase a fully-marked-up Kindle.

Critically, it also undermined the hardcover market that brick-and-mortar stores depend on. It was as if Netflix announced that it would stream new movies the same weekend they opened in theaters.

If your business is dependent on a product whose popularity has taken a nosedive over the past few years, perhaps it's time to rethink your product line rather than blame the market leader's foresight. And since when is it Amazon's job to prop up brick-and-mortar stores?

Oh, for the love of... Really? You hail Apple as the savior of the sinking USS Publishing Industry, and you somehow think you can still bash someone else's "walled garden" and "proprietary device-and-format?" Isn't it worth pointing out that one of the reasons Amazon has a closed, proprietary device-and-format is because the publishers demanded a locked up system for fear of "piracy"?

Two years after it introduced the Kindle, Amazon continued to take losses on a deep list of e-book titles, undercutting hardcover sales of the most popular frontlist titles at its brick and mortar competitors. Those losses paid huge dividends. By the end of 2009, Amazon held an estimated 90% of the rapidly growing e-book market.

Well, looks like you should have gotten in on the ground floor, rather than ruefully envying a market that you seemed to want no part of.

Enter Steve Jobs. Two years ago January, one month after B&N shipped its first Nook, Jobs introduced Apple's iPad, with its proven iTunes-and-apps agency model for digital content. Five of the largest publishers jumped on with Apple's model, even though it meant those publishers would make less money on every e-book they sold.

Enter Steve Jobs, creator of walled gardens and proprietary devices and formats. And look, the publishers jumped right in even though they were giving up a bigger chunk to the walled gardener. Wait. What are we arguing about? Oh, yeah. Amazon being more evil than price-fixing publishers. Got it.

Publishers had no real choice: it was seize the agency model or watch Amazon's discounting destroy their physical distribution chain. That's why we publicly backed Macmillan when Amazon tried to use its online print book dominance to enforce its preferred e-book sales terms, even though Apple's agency model also meant lower royalties for authors.

I'm sorry. You lost me, Turow. You want to discuss e-book pricing and yet we keep finding ourselves wandering the musty aisles of brick-and-mortar. And I'm sure your lower-tier guild members are thankful to you for ensuring that they receive less money in your preferred walled garden, while simultaneously sabotaging their future sales by using inflated e-book pricing to protect hardcover margins.

Our concern about bookstores isn't rooted in sentiment: bookstores are critical to modern bookselling. Marketing studies consistently show that readers are far more adventurous in their choice of books when in a bookstore than when shopping online. In bookstores, readers are open to trying new genres and new authors: it's by far the best way for new works to be discovered.

No. Your concern is rooted in unsustainable profit margins. And would it kill you to link to these "marketing studies" that "consistently" back up your rose-colored vision of bookstores as far as the eye can see?

Publishing shouldn't have to choose between bricks and clicks.

It rhymes! And it's a false dichotomy! Publishing doesn't have to choose between those options. It can still have both. What it can't have is a return to the days of pre-digital book sales and the lush markups of first-run hardcovers. If you're looking to increase sales, it helps if you don't price yourself out of the market, via "collusion" or "agency pricing" or just flat-out refusing to align your e-book prices with reality.

A robust book marketplace demands both bookstore showrooms to properly display new titles and online distribution for the convenience of customers.

Does it? If the marketplace you have now (you know, the one that seems light on bricks and/or mortar) isn't a result of "demand," than what is it? When you say "robust market", what you're really saying is "a market that favors major publishers". It has nothing to do with the actual robust market we have today, with millions of titles and hundreds of options for both customers and writers.

Apple thrives on this very model: a strong retail presence to display its high-touch products coupled with vigorous online distribution. While bookstores close, Apple has been busy opening more than 300 stores.

So... if Amazon just opened a few retail outlets to sell its Kindle and deeply-discounted e-books, everything would be cool? Is that it? The retail world needs more brick-and-mortar foisted upon it simply because The Prices Are Too Damn Low?

Like rock bands from the pre-Napster era, established authors can still draw a crowd, if not to a stadium, at least to a virtual shopping cart.

And this week's winner of the Godwin Achievement Award (Content Industries Edition) is Scott Turow! Between this and the gratuitious Netflix reference (the killer of brick-and-mortar movie rentals), Turow is only one dodgy metaphor away from sweeping the category!

For new authors, however, a difficult profession is poised to become much more difficult. The high royalties of direct publishing, for most, are more than offset by drastically smaller markets. And publishers won't risk capital where there's no reasonable prospect for reward. They will necessarily focus their capital on what works in an online environment: familiar works by familiar authors.

Yeahyeahyeah. This argument. "Now things will suck for the lower tier of creators because no one will know or care that they've made anything, least of all those in the business of curating and selling creative content. Woe is everybody, especially those that find themselves handcuffed to a disinterested publisher who won't promote their latest and won't allow them access to their own back catalog." This thing that you think only works in an "online environment," Scott? "Familar works by familiar authors?" That's the same thing that the major publishers have been doing for years. This isn't an unfortunate side effect of the digital era. Mainstream publishers push mainstream offerings.

The indies and the self-published are where the new, exciting things will happen. And they'll do it all without your precious walled-garden-of-choice, the one with the letter "i" in front of everything, crafted entirely out of brick, mortar and windows. They'll do it on their own. Or they'll find a few like-minded writers and start their own publishing house with strippers and blackjack! And they won't need your "protection" or "author's guild" or lousy pricing or ridiculous windows to do it. Hell, some of them might even find a way to rake in hundreds of thousands of dollars while never pricing anything above a "predatory" $2.99. Weird, I know. But these things do happen. And they happen without the "power" of the major publishing houses behind them.

Any final words, Scott?

Let's hope the reports are wrong, or that the Justice Department reconsiders. The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition.

This would be tragic for all of us who value books, and the culture they support.

I can't even parse that sentence. Are you implying that price fixing is "real competition?" Or are you saying that windows, e-books at hardcover prices and walled gardens are the "real competition" and any entity working outside those self-imposed confines is only offering the "appearance of competition?" Or does "real competition" only include those that are looking to see how high they can price their offerings? And anyone who fails to price accordingly should be investigated for "predatory pricing." Is that about the size of it?

Let me FTFY:

That would be tragic for THOSE OF US who OVERVALUE our LEGACY, CULTURE BE DAMNED.

Valuing something doesn't mean paying top dollar for it. Does the person who owns 30 hardback books purchased at full retail respect culture more than the person who has 30 lower-priced e-books on their reader? If you believe that, you've got to let it go. Trying to convince the rest of the world that the only way to "value" culture is to pay top-dollar isn't going dispel that aura of entitlement that seems to surround every legacy industry.

Everyone values books and supports culture in their own way. What you want, Scott, is control over all of it. You want to be able to set the prices, timetable and delivery system. Unfortunately, you no longer have that option. Whether or not the DOJ finds evidence of collusion is largely unimportant in the overall scheme of things. If it does, prices will fall to market levels faster and windowed releases will become rarities. Even if the DOJ clears Apple and the publishing houses of any wrongdoing, prices will fall and windowed releases will become rarities. It's already happening. The future belongs to other people and businesses who move faster, respond to change quicker and are free of the fears that have held legacy industries back. This "statement" of yours is nothing more than the bitter noise of someone waist deep in water, cursing the incoming tide.

from the hello-compulsory-licenses dept

India has an interesting relationship with pharmaceutical patents. In 1970, India did away with drug patents entirely, believing it would help create a domestic drug industry. And it worked. As we discussed in the past:

2,237 licensed drug manufacturers in 1969-1970 grew to 16,000 by 1991-1993, production of drugs grew at an average rate of 14.4% per year from 1980 to 1993, India became a net exporter of pharmaceutical products, and the market share of foreign multinational corporations (MNCs) dropped from 80-90% to 40% (Fink 2005). In 1995, six of the top ten pharmaceutical firms in India were domestic, and employment in the sector had reached half a million people

Now, remember how people say that without intellectual property, industries protected by those monopolies collapse? Yeah, the opposite happened in India. And yes, many were producing generic versions, but not all of them were. Either way, despite all of this success, the international community, pressured by the big pharmaceutical firms, cracked down on such practices, and demanded that if anyone wanted to join the WTO -- an important organization for large countries to be a part of -- they had to recognize pharmaceutical patents as per the TRIPS agreement. India finally did so in 2005.

However, one key point in TRIPS that developing countries such as India and Brazil have paid close attention to is the fact that they can force a compulsory license on a drug patent holder in the interest of public health.

For the first time since re-instating patents on pharmaceuticals, India has granted just such a compulsory license, covering a kidney and liver cancer drug marketed under the name Nexavar. Indian generic drug company Natco requested a license, noting that Nexavar was in short supply in India and exceptionally expensive. A typical dosage costs around $70,000 per year in India -- something Bayer says is necessary to recoup the drug's R&D costs. However, reports show that it cost less than $300 million to develop this drug (not to mention that the US government subsidized the process) and Bayer has already made billions selling the drug around the world. In a detailed ruling (pdf and embedded below), India's Controller of Patents (nice title) granted Natco the right to make the same drug, requiring it to sell it at a significantly lower price than Bayer sells Nexavar for, and then pay back to Bayer a 6% royalty rate (which is actually at the high end of what the UN recommends). Natco has to make the drug itself and can't name it Nexavar, make it look the same or even state that it's the same as Nexavar -- but it can make its own version of the drug and sell it, and the license lasts the life of the patent. Bayer can and almost certainly will appeal, but this is going to be interesting to watch for a few reasons.

The real question here is how the US will react to this. The Obama administration has been trying to exempt drugs that treat non-communicable diseases (such as cancer medication!) from such compulsory license rights. In the meantime, the big (non-Indian) drug companies have been working hard to lock up the Indian drug market with patents. Not surprisingly, the Obama administration and the big drug companies have a cozy relationship when it comes to dealing with patents in India.

It's likely that you'll start to hear some rumblings from the US government about how this kind of ruling is a "problem" and how India isn't "respecting" international patent law. Expect to see diplomatic pressure placed on India to put limits on its compulsory licensing program, and potentially even noises about how India has to change its patent laws to "update" them and "harmonize" them with the world. Also don't be surprised if stuff like this leads India to jump up the charts on next year's Special 301 reports from the USTR, which list "naughty" countries. It's probably too late to make it into this year's list for this particular move. Is it really any wonder that India is so worried about ACTA? It knows that ACTA is entirely about ratcheting up enforcement, without any exceptions for things like this where something as important as saving lives comes into play.

from the scalability-problems dept

In 2008 James Bessen and Michael Meurer came out with a truly excellent book, Patent Failure. It's chock full of excellent information and a pretty wide survey of the research showing just how much patents harm innovation. While I don't necessarily agree with the "solutions" proposed, the key thesis of the book makes a tremendous amount of sense: to have a functioning market, you need property with clear borders. If the borders aren't clear at all, the end result is that no one knows when they're trespassing or even what they're buying, and the benefits of a market collapse, and instead you get mired down in legal disputes. That's exactly what we're seeing with patents today. Of course, one of the key reasons for this -- as we've been explaining for years -- is that patents are not property -- and thus the attempt to force property-like rules on something that is naturally abundant is going to make it impossible to creates reasonable boundaries.

Tim Lee wrote about the book, highlighting this very point right here on Techdirt soon after the book came out in 2008. Apparently, it's stuck with him. Lee, along with Christina Mulligan at Yale, have built on that idea to write an excellent research paper that explains how it's effectively impossible to actually avoid infringing on software patents. The key? It's a scalability problem.

Lee and Mulligan have written up a shorter summary of the piece at Ars Technica that makes the point clearly. Because software and software patents don't have "defined boundaries," you really have to go through every single software patent to make sure you don't infringe -- but that's a problem that's insurmountable:

we estimate it would take at least 2,000,000 patent attorneys, working full time, to consider whether all these software-producing firms have infringed any of the software patents issued in a typical year. Even if firms wanted to hire that many attorneys, they couldn't; there are only 40,000 registered patent attorneys and agents in the United States.

This isn't surprising. While some people assume that patent infringement is all about one company "copying" another, in the vast, vast majority of cases it involves independent invention (often of the obvious next step in a process). The infringement couldn't be prevented, because the companies were just building what they needed to build to serve the market, and it's basically impossible to check to see if you actually infringe on another patent. Some patent system defenders pretend it's easy to find these patents, but that displays a lack of understanding about the true size of the problem.

As Lee and Mulligan note, companies infringing on software patents have nothing to do with companies trying to copy others or "get something for free", and everything to do with the fact that it's "mathematically impossible for them to do anything else."

from the don't-mess-with-reddit dept

Lamar Smith has really become the enemy of the internet. He's the main sponsor behind both SOPA and the very dangerous data retention bill that he disguised as an anti-child porn bill, even though it does nothing to stop child porn. Don't think the internet hasn't noticed. With lots of internet folks in Austin (part of which is covered by Lamar Smith's district), Erik Marin (GM of Reddit) and Holmes Wilson (co-founder of Fight for the Future) had the bright idea to buy a billboard in Smith's district with the slogan: Don't Mess with the Internet. The final design of the billboard is still being worked on, but Reddit co-founder Alexis Ohanian jumped right in and set up a crowdfunding campaign to try to raise the necessary $15,000. Feel free to join in and help send Lamar Smith a message...

from the how-very-unlibertarian-of-you dept

Back in January, we wrote about the bizarre decision by Ron Paul to file a lawsuit to unmask some anonymous internet users, who had created a controversial anti-John Huntsman video. At the end of the video, the anonymous videomakers had endorsed Paul, but some conspiracy-minded folks insisted that they were really working for Huntsman and staging an elaborate ruse to put up a video that looked bad about Huntsman to have that backfire on Ron Paul. For a variety of reasons that's either improbable or just downright stupid. But even if we assume the worst case scenario, Ron Paul's lawsuit not only made absolutely no legal sense, but it also seemed to go against nearly everything he believed in concerning internet freedom and the overreaching power of the government.

Either way, a judge has rejected Paul's attempt to unmask the videomakers on the narrow grounds that he failed to state a legitimate claim, since the video was not commercial in nature (necessary for a trademark violation). The judge did not go so far as to get into the First Amendment issues, but made clear that if Paul comes back with an amended suit with an actual claim, then the First Amendment considerations will be covered. Kudos to Paul Levy at Public Citizen for filing a pair of amicus briefs in the case to make sure the judge was aware of what was happening -- and hitting back at Paul's camp for its initial filing that completely ignored the relevant law and legal standards for unmasking anonymous internet users.

There are a number of especially troubling items in terms of how Paul and his camp went about this. First, just trying to unmask anonymous internet speech seems extremely problematic. Second, however, is the way in which he tried to twist trademark law to do so. As Eric Goldman explains, Paul's attempts to route around the clear requirements of trademark law were especially mockable:

To try to salvage the situation, Paul tries two mockable arguments. First, he argues that YouTube and Twitter are commercial sites, and that gives the dispute enough commerciality. The court rightly points out that the inquiry is about the defendant's conduct, not the websites where it took place, and notes the argument's illogic would mean non-commercial activity on any commercial website would be governed by the Lanham Act. In a footnote, the court adds that "using another company’s commercial website to post a comment or video is just far 'too attenuated' to result in an individual’s own conduct automatically meeting the Lanham Act’s commercial use requirement."

Second, Paul argues that "the video was intended to frustrate Plaintiff’s fundraising efforts and increase the amount of money contributed to Presidential nominees other than Ron Paul." The court says the Lanham Act is predicated on the defendant trying to improve its competitive status, and these defendants had no competing services; and the video on its face didn't try to solicit any donations.

Anonymous speech is protected under the First Amendment, and abusing trademark law to try to unmask anonymous speakers, whose speech was not commercial, is clearly an abuse of the law to try to "out" people online. As some have noted, it appeared to go against Ron Paul's own key principles -- and whether you agree with him or not, Paul certainly has the reputation for standing up for his principles. Yet here, suddenly, all of that went out the window:

What continues to amaze me, though, is how Paul is getting a free pass for this assault on free speech. Mitt Romney and Rick Santorum haven't filed lawsuits over identical videos that use their names in attacking Huntsman; why is Ron Paul the only candidate who filed such a suit? Indeed, so far as I have been able to discover, he is the only serious candidate for President in the past few decades who has ever filed a libel suit, and there are certainly Presidential candidates who have suffered far worse attacks. (I am not thinking of candidates who sued longer ago, but fifty years takes us back to the beginning of First Amendment protection against libel litigation brought by public figures). Why aren't the reporters who follow him around on the campaign trail not asking him how he can justify his use of litigation to oppress his critics and how it is consistent with the principles of liberty for which he claims to stand? How is this consistent with his First-Amendment based assault on campaign finance regulation such as McCain-Feingold? Does he just want to substitute the courts and privately financed litigation for the FEC?

Also surprising to me, is that even Paul's very vocal online supporters seem to refuse to recognize the issue here. I was amazed on our original post how many commenters came to Paul's defense here because they think that the videos were designed to make Paul look bad, and therefore the people "must" be revealed. That's not how the law works and that's not standing up for the basic principles of free speech, internet freedom and liberty that they supposedly stand for.

The sign of a truly principled person is when you're willing to retain those principles in the face of a situation where standing firm hurts you. Instead, Ron Paul folded and suddenly relied on big federal government regulations and abuse of the law to try to take away individuals' free speech rights.

from the uh,-bad-decision dept

A couple weeks ago, we noted that with all of these questionable domain seizures going on, it was a shame that ICANN wasn't speaking out against such questionable abuses of the domain system. We thought its silence was a sign of its impotence to actually take a stand. Turns out we may have actually overestimated ICANN's willingness to stand up for the internet. You see, late last week it put out a "Thought Paper on Domain Seizures and Takedowns."

By "thought paper" -- they actually mean an instruction manual.

Seriously. The document is basically a step-by-step guide for government officials on how to seize, takedown and censor websites. It has sections like "guide for preparing domain name orders, seizures & takedowns" and "checklist of information to submit with a legal or regulatory action." This is exactly the opposite of what ICANN should be doing if it believes in preserving the basic structure and principles of the internet. But given ICANN's general incompetence, is it really any surprise that it's ending up on the wrong side of this issue, too?

from the good dept

As we noted when one of the recent cybersecurity bills was introduced in the Senate, it was accompanied by a press release that explicitly stated that this bill wasn't SOPA. While the entertainment industry keeps hoping that the anti-SOPA protests were a one-time experience, apparently the power of internet users is very much on the minds of nearly everyone on Capitol Hill who have turned the phrase "don't get SOPA'd" into a new mantra.

This is excellent news in a number of ways. Congress should fear backlash from going against the will of the people, especially in mucking around with some of the key tools they use to communicate every day. The only issue I take with the article is that it rehashes the false dichotomy that SOPA was "Silicon Valley vs. Hollywood," and quotes lots of people who continue to talk about how the way to avoid "getting SOPA'd" is to talk to the tech industry, but not to internet users themselves. Now, I think that talking to the tech industry is a good place to start, and it is an important stakeholder in understanding the internet, but what drove the SOPA protests was the users. Yes, tech companies helped get their users interested in the topic, but once the users on Tumblr, Reddit and Wikipedia took over, they were the ones driving the bus. The companies themselves took a backseat and, at times, were pressured into going along with what the users wanted, against their own concerns (for example, the date of the January 18th protests, which many "industry insiders" thought was too early, since the Senate wasn't yet in session).

So, while quotes like this are great to see:

“Nobody wants another SOPA moment,” Rep. Jason Chaffetz (R-Utah), a vocal critic of SOPA, told POLITICO. “The nerds are more powerful than anyone thought, and the tech industry flexed its muscle like never before.”

Rep. Jared Polis (D-Colo.) said the anti-SOPA movement showed a certain “coming of political age” for the tech industry, and his colleagues in the House are treading carefully.

“They’re involving the tech community more and are more interested in listening,” said Polis, who also opposed SOPA. “They’re paying closer attention now.”

I think even those two strong allies in the fight against SOPA are missing the mark somewhat. It's not the tech industry that people need to be paying such close attention to. It's the internet users themselves. Ignoring that and just trying to court deals with the companies is a strategy that's likely to backfire.

At the end, the article acknowledges this in a rather backhanded way -- merely using it to suggest that the tech industry really isn't so powerful and that politicians shouldn't worry about another SOPA:

“The rational observers realize there’s a significant overestimation of high tech’s ability to control the netroots,” said one industry lobbyist.

Another lobbyist said it’s “nearly impossible” to get the tech community to engage on policy issues, especially complicated measures that are highly technical, such as cybersecurity, or dry, such as online taxes.

“SOPA was an inflection point and people on the Hill are certainly going to take more notice next time around,” the lobbyist said. “But one incident like that isn’t going to be the huge game changer.”

But notice what's totally ignored here. That the "netroots" -- the internet users who stood up and spoke out by the millions -- still are engaged and aware. The lobbyist is correct that the tech industry can't control the netroots. But that doesn't mean there's nothing to fear concerning another SOPA, it means that politicians need to be open and engaging with the netroots, not just the tech industry.

And this article suggests that folks on Capitol Hill still might not understand that... which is why it actually may be more likely that we'll see another SOPA moment.

During a classified briefing in the Office of Senate Security, Homeland Security Secretary Janet Napolitano and White House counterterrorism adviser John Brennan showed lawmakers how a hacker could breach control systems of the city’s electric system and trigger a ripple effect throughout the population and private sector, according to a source familiar with the scenario.

“The fact that we could be subject to a catastrophic attack under the right circumstances and we now know some of the things that would help us to protect against such an attack, that’s why it’s important now for the Congress to take this up,” Napolitano said in an interview with POLITICO.

Now that's interesting. Just how could a hacker breach control systems of the power grid? Apparently with an email phishing attack:

During the simulation, the hacker gains access to the electric supply’s control system through a simple “spearphishing” attack, in which a worker merely clicks on a link in an email that appears to be from someone they know.

Um, there's your problem. If the NYC power grid is attached to the public internet in such a way that it can be taken down, then um, shouldn't we take it off the internet? This isn't about cybersecurity, this is about common sense, where things like the power grid should not be accessible via the internet -- and I'm pretty sure they're not (back here in reality). But in the world where we need fear, uncertainty, doubt and the ability for the federal government to spy on private networks, we have to pretend such a scenario is likely.

Of course, I also question why the White House chose NYC as the showcase for the simulation and suggested that there would be deaths and other massive harm from such a power grid takedown. After all, it was just about a decade ago that the power grid in the Northeast did, in fact, fail. It was an inconvenience for many people, certainly, but it was hardly damaging in the way the White House seems to have implied with this scare tactic.

So, once again, can we take a step back and ask some simple questions: what's the real threat and the real risk here? If it's that the NYC power grid is accessible by a simple password over the public internet, then the problem isn't cybersecurity, it's whoever was stupid enough to connect the power grid to the internet. Let's fix that. But let's not regulate and spy on large segments of the public internet to cover for a few bad decisions.

from the good-question dept

Back in 2009, we wrote about a case involving a company called Ultramercial, which held a broad and ridiculous patent (7,346,545) that effectively covered the process of watching an ad before you could download content (seriously). Ultramercial sued Hulu, YouTube and WildTangent over this. The case went back and forth with an initial ruling that rejected the patent, by noting that it was just an "abstract idea" and abstract ideas are not patentable. As that court ruling noted:

At the core of the '545 patent is the basic idea that one can use advertisement as an exchange or currency. An Internet user can pay for copyrighted media by sitting through a sponsored message instead of paying money to download the media. This core principle, similar to the core of the Bilski patent, is an abstract idea. Indeed, public television channels have used the same basic idea for years to provide free (or offset the cost of) media to their viewers. At its heart, therefore, the patent does no more than disclose an abstract idea.

Tragically, CAFC, the appeals court that handles patent matters and has a long history of expanding patent law, reversed the lower court's ruling and deemed the patent valid. While it didn't put it in these words specifically, it certainly appeared that the court was saying that any abstract idea can still be patentable if you just make it happen "on the internet."

In that ruling, the court discusses the fact that "abstract ideas" are not patentable, and notes that it used to use its machine-or-transformation test to determine if something was or was not an abstract idea. However, after the Supreme Court ruled in the Bilski case that this test might not always be appropriate, while failing to say what test would be appropriate, it's left CAFC with the freedom to make up totally arbitrary rules. And in this case, the arbitrary rule was effectively "we don't apply the machine-or-transformation test to 'information age' inventions." Why? Because if the inventions aren't physical, the machine or transformation test no longer applies:

While machine-or-transformation logic served well as a tool to evaluate the subject matter of Industrial Age processes, that test has far less application to the inventions of the Information Age.... Technology without anchors in physical structures and mechanical steps simply defy easy classification under the machine-or-transformation categories.

Shorter version: what would be considered unpatentable abstract ideas in the offline world suddenly become patentable if you add "on the internet" to them.

That doesn't sound right to lots of people, and thankfully WildTangent is appealing the case and hoping the Supreme Court will hear it. As the petition to the Supreme Court notes, the question presented is:

Whether, or in what circumstances, a patent's
general and indeterminate references to "over the
Internet" or at "an Internet website" are sufficient to
transform an unpatentable abstract idea into a
patentable process for purposes of 35 U.S.C.

Along with the petition, there were also two interesting filings in support, urging the Supreme Court to hear the case. One from Redhat, CCIA and EFF, which goes into great detail about how such broad patentability would seriously harm the open source world, and a strongly worded brief from Google and Verizon (yes, together) about how such a ruling would do serious harm to innovation by allowing all sorts of abstract ideas to be locked up via patent. Hopefully the Supreme Court is willing to listen -- and will push back (yet again) on a bad CAFC ruling.

from the screw-you,-customers dept

Reader Jason Alcock alerts us to another example of a company taking a backwards approach to value-added services by putting artificial restrictions on their content. Apparently, while ebooks from the popular publisher Penguin are available to borrow from Kindle libraries,
Penguin requires that they only be transferrable by USB, not wireless. This, in turn, means that they cannot be read with the free Kindle apps on platforms like iOS and Android, since USB transfer is only supported on the Kindle device itself.

I'm at a loss as to what this is supposed to accomplish. Kindle books are DRM-controlled regardless of how they are transmitted, so it has no impact on the potential for piracy. Presumably Penguin thinks this will spur more readers to buy rather than borrow, but in reality it has just created consumer confusion and angry backlash.

Of course, this isn't the first time a publisher has tried to place arbitrary restrictions on ebook lending. It's an especially frustrating trend, because the entire concept of "lending" ebooks is already one big artificial restriction. When will content companies learn that courting customers is about adding value, not taking it away?